European firms cautious on Chinese prospects

01 July 2010

BEIJING: Many European companies expect the regulatory and political climate in China to become more restrictive in the next two years, but remain optimistic about growth prospects in the country.

According to the European Chamber of Commerce in China, 64% of corporations with a presence in the world's most populous nation named it among their top three destinations for future investment.

However, 39% of firms thought the domestic legislative environment would become increasingly challenging over the next two years, compared with 10% that believed it would improve.

Similarly, while 78% were in positive mood when it came to boosting their Chinese revenues, only 34% said the same relating to the profitability of their local operations in 2010.

One major contributor to the broad feeling of anxiety has been the face-off between Google and the Chinese government regarding state censorship.

"The Chinese authorities should not take the presence and commitment of European companies for granted,” said Jacques de Boisseson, president of the European Chamber of Commerce in China.

"This massive commitment to the Chinese market is not unconditional. If perceived risks materialise to a great extent, the presence and commitment of our members may disappear.”

The Chinese authorities have taken some steps to address these kinds of issues, including changes to procurement rules.

Wen Jiabao, the country's premier, also met a delegation of European business leaders in April and stressed they would not be on the receiving end of negative treatment favouring their indigenous rivals.

"We do not want to have to vote with our feet to be heard by the Chinese government," said de Boisseson.

"But the perception today is one of concern and we look forward to the premier's words being translated into deeds."

Data sourced from Financial Times; additional content by Warc staff